You might say Michael Banks has "been around the block" when it comes to eBay drop-off stores. In June 2000, he worked with MyEZsale.com, an eBay drop-off service that made itself available through pack-and-ship stores. He left MyEZsale and began offering "house-call" consignment services independently, then opened up an eBay drop-off store called Oasis on Long Island with a friend. Later, he became President of QuikDrop, a franchisor of drop-off stores. Now, Banks is on his own again and is offering consulting services to independent eBay drop-off stores through his website, edosa.org.
In a recent interview, Banks offered up seven tips for entrepreneurs thinking of getting into the space. You might be surprised at what he has to say.
One: Get eBay experience.
Getting experience selling on eBay is crucial before making the decision to open up an eBay-related business, Banks says. Many people are drawn to drop-off franchises who have no eBay experience, and he saw many stores take in a lot of items they shouldn't have during their first 6 months of business due to lack of experience. Experience can also help you avoid online scams, like the infamous counterfeit cashier's check scam.
Two: Choose your location wisely.
Think warehouse, not retail store, Banks said. He recommends getting a warehouse in an industrial park setting rather than a prime retail location. The advantages are cheaper rent and lower lease commitments. "One franchisee I worked with was prepared to sign a 10-year lease," Banks said. "That's an impossible commitment. The shorter the lease period, the better."
Three: Get help!
Banks said there is a difference between owning and running a business. Owners promote their businesses, so hire some help to help you run the business, even if it's a part-timer. (And hire eBay-experienced help, while you're at it!)
Four: Promote your business
Join the Chamber of Commerce - networking with business people is crucial to drumming up business. This can be much more effective than advertising to consumers, according to Banks.
Five: Move up the food chain.
Rather than approaching retailers for their excess inventory or returned merchandise, move higher up the food chain. Cut deals with distributors, wholesalers and manufacturers. While pallets of like goods might be too much to dump onto eBay, taking 10 percent to sell one-off and selling the rest in a lot can be an effective strategy (see next tip).
Six: Don't limit yourself to eBay.
Consider other marketplaces besides eBay, particularly when you have large lots. Check out wholesale sites like Liquidation.com, says Banks.
Seven: Don't take junk.
When Banks ran his consignment businesses, he always charged customers a listing fee that they would pay no matter if the items sold or not. Banks said this helped him get good items with higher-selling prices, always a challenge for eBay sellers. If the consignee isn't willing to pay a fee to have a service sell their item, the item may not be worth selling, Banks said.
The kind of consignment business Banks describes looks much different than the ones many people conjure up when thinking of an "eBay drop-off store." If you decide to jump into consignment sales, explore all your options. And Tip #1 applies no matter what kind of eBay business you decide to open. Mistakes can be expensive, so do your homework and get experience!
